Contents: 1. Introduction. 2. Foreign institutional investors in India: an overview. 3. Indian capital market and regulatory framework for FIIs. 4. FIIs operations in Indian capital market and testing of hypotheses. 5. Findings, conclusion and recommendations. 6. Bibliography. The remarkable economic growth during the past two decades in most of the emerging countries had been stimulated by foreign capital inflows from developed countries. There was a surge in capital inflows into India too since 1992 as in India, the purchase of domestic securities by FIIs was first allowed in September 1992 as part of the liberalisation process that followed the balance of payment crisis in 1990-91. Nowadays, a significant portion of Indian corporate sector's securities are held by Foreign Institutional Investors. Foreign Institutional Investors (FIIs) have been a key part of India's growth story this decade. Foreign Institutional Investors have been a major source of funds into the Indian Capital Markets in the past few years.